Global non-life premium growth expected to stagnate, at best: Swiss Re

World insurance premium income grew 3.3% in real terms in 2007, reaching US$4.06 trillion, with global non-life premium growth slowing to 0.7% in real terms, totalling US$1.668 trillion, according to a Swiss Re sigma study.
The results from six major primary insurance markets suggest that the combined ratio deteriorated slightly to 97%, on the back of continuing pressure on rates Swiss Re reports.
Average catastrophic losses and favourable prior-year reserve developments contributed positively to the results, but investment returns were marginally lower than in 2006, it continues.
Profitability of the sector declined, with the average ROE dropping from 12% in 2006 to 9.4% last year.
Underwriting discipline of recent years allowed insurers to release loss reserves, and shareholder capital continued to grow, the sigma report says.
“In 2007, capital again expanded faster than direct premiums in 2006. The solvency position continued to improve after having bottomed out in 2002, revisiting the levels last seen during the late 1990s,” it continues.
2008 will be a challenging year for the non-life insurance sector, given the soft market. “With the sustained pressure on rates and the slowdown in economic activity, premium growth in the non-life market is expected to stagnate, at best,” the report says.